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MGT601 - SME Management - Lecture Handout 08

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The ROLE Of NGOs

The NGOs are working on socio-economic sector in the development of SMEs. They are privately owned organization registered under the social welfare act. They normally work through grants, aids or donation based finances. They are having a very constructive role in the SME development. The special property of this sector is gender development. They at some places tried to replicate Grameen banks model.

NGO Non-governmental Organization, a non-for-profit agency not affiliated with any government or private sector entity, devoted to managing resources and implementing projects with the goal of addressing social problems. May receive some public funding. NGO is a community based organization with its own management structure. The organization may receive some or all of its operating funds through a government department known as the funder, however it is accountable or answerable to its stakeholders - the people who stand to benefit or lose by its actions. The funder is one of those stakeholders. NGOs play a vital role in development of SME. NGOs helps to reduce poverty, NGOs create awareness in women of rural areas to develop small business in their own premises.

The NGO Business

Non-governmental Organizations (NGOs) have become involved in international trade in recent years in two different ways. The first is to establish fair trade cooperatives to facilitate the export of goods from developing to industrialized countries directly from the producers. Their underlying operating principle is to ensure that more of the profits from the sales of diverse products go to the producer and less to middlemen. Often these products are slightly more expensive than similar goods in the market and these businesses rely on the social conscience of its customers to ensure a steady market for their products.

Another less well-known NGO business strategy is for the NGO itself to take on the role of designer, marketer and distributor of specific products and to work with particularly disadvantaged groups, primarily women, as sub-contractors who are taught to produce the goods that the NGO sells. Thus the NGO, in effect becomes a private sector actor. How they differ from standard private sector producers is in their selection of subcontractors and the fact that all profits are invested back into the organization to ensure organizational sustainability and to expand their base of sub-contractors. Their subcontracting role also serves to empower their sub-contractors as opposed to setting up an exploitative piecework arrangement. It provides a viable means of poor women to set up their own home-based enterprises. The key to the success of this particular strategy is the fact that the NGO takes on the responsibility for the development of the international market for the product produced.

SMEDA (Small and Medium enterprises Development Authority)
Introduction

Premier institution of the Govt. of Pakistan under Ministry of Industries, Production & Special initiative, SMEDA was established in October 1998 to take on the challenge of developing Small & Medium Enterprises (SMEs) in Pakistan. With a futuristic approach and professional management structure it has focus on providing an enabling environment and business development services to small and medium enterprises. SMEDA is not only an SME policy-advisory body for the government of Pakistan but also facilitates other stakeholders in addressing their SME development agendas. Growth of globally competitive SME sector through a conducive and facilitating environment and support services as an engine of growth and sustainability to national economy.

Mission Statement

To function as the promoter & facilitator of SME sector in Pakistan by creating a conducive and facilitating environment as well as providing and facilitating service delivery to SMEs for enhancing their capacities and competitiveness.

SMEDA Objectives

  1. Policy formulate to encourage the growth of SMEs in the country and to advise the Government on fiscal and monetary issues related to SMEs.
  2. Facilitation of Business Development Services to SMEs.
  3. Facilitate the development and strengthening of SME representative bodies associations/chambers.
  4. Set up and manage a service provider’s database including machinery and supplier for SMEs.
  5. Conducting sector studies and analysis for sector development strategies.
  6. Facilitation of SMEs in securing financing.
  7. Strengthening of SMEs by conducting and facilitating seminars, workshops and training programs.
  8. Donor assistances for SME development of SMEs through programs and projects.
  9. Assist SMEs in getting international certifications (such as UL, CE, DIN, JIS, ASME, KS, etc.) for their products and processes.
  10. Identification of service opportunities based on supply/demand gap.

References

  1. Research cells SMEDA/LCCI
  2. Small industries and the developing economy in India by R.V.RAO
  3. The essence of small business by ADRIAN BUCKLEY

Book recommended

Small industries and the developing economy in India by R.V.RAO

Key terms

  1. NGOs (Non Governmental organizations)
  2. Autonomous (Self governing)
  3. Debt equity ratio (The ratio of money participation by the borrower and lender)
  4. Subsidize (Helping money given by government to the producers)
  5. Portfolio (A group of different investments held by a private investor)

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